This toolkit will help you to understand and make the business case for engagement and present it to internal and external audiences. It is designed to help you explore, identify and articulate the costs and benefits of engagement, making some conclusions about its overall value. It can be used for all kinds of engagement from small scale ‘one off’ projects to major exercises across an entire town or wider local authority area.
It is aimed at those who manage, design, deliver, plan or commission public engagement projects. It does not require the reader to have detailed knowledge of economics. The results will not be as comprehensive or in-depth as a professional or academic study but will provide sufficient reliable evidence to build a well-argued case that stands up to challenge and scrutiny. The toolkit also features a pair of spreadsheets with equations that can be used to capture financial data on engagement projects. One spreadsheet is for cases where you want to compare the costs and benefits of an engagement project with the costs and benefits of another activity (Equation form with comparator, see attachment below) and the other is for cases where you just want to measure the costs and benefits of an engagement project on its own (Equation form without comparator, see attachment below).
There are many tools for measuring costs and benefits, such as cost benefit analysis, cost-effectiveness analysis and social return on investment. However, these tools are often inadequate for assessing engagement. To date there have been only limited economic assessments of public engagement. The reasons for this vary but some of the most common are: the complexity of engagement processes, resistance to the use of economic methods by practitioners or decision-makers, lack of appropriate data, and the cost of proper economic valuation.
However, monetary values are often preferred as they provide a common measurement unit that can be easily compared. A key challenge for engagement practitioners is that many of the benefits of engagement are intangible or long-term and hard to monetise.
It would be easy to look at these challenges and to assume that measuring the costs and benefits of engagement is too difficult. However, it is possible to assign value to an engagement process, as the example below shows, and this toolkit explains in more detail.
Definitions
What is a business case?
A business case includes a description of what is being proposed and why it is important, including the aims and objectives, an assessment of what it will cost and the impacts and benefits that will result. Business cases are used to show that something is worth doing.
The business case for engagement presents the benefits and efficiency savings which organisations such as local authorities and their partners may be able to make, either by reducing the costs of their current activities, preventing costs from accruing or achieving positive impacts and outcomes such as health improvements or building social capital.
A business case is linked to but is not the same as a ‘cost-benefit analysis’. It does not have to limit itself to measuring what can be expressed in pounds and pence but can consider a wide range of benefits and outcomes. The methods used are similar to, but distinct from, evaluation.
In the field of public engagement many important impacts on service improvement and outcomes in areas such as education, employment and social cohesion are not routinely measured – possibly because: they are not directly quantifiable, effective ways to measure them have not yet been developed, or because measurement has not been required for reporting purposes. This toolkit includes guidance on how to work out values and include them in the case.
How to use this toolkit
This toolkit enables you to do a number of things:
- Build a business case for an individual engagement project;
- Build a business case for engagement across an entire organisation or a geographical area;
- Compare the costs and benefits of different engagement approaches (or non-engagement).
The toolkit includes:
- Costs that can be given a monetary value
- Benefits that can be given a monetary value
- Costs that cannot be expressed in monetary terms
- Benefits that cannot be expressed in monetary terms
The reason we have included the latter two is that intangible factors are especially important for engagement projects and so need to be built in from the start. This makes sure they do not get overlooked or underestimated.
In many cases reducing engagement to what can be valued monetarily misrepresents and underestimates the inputs and outputs, so gives an inaccurate picture In addition, reducing engagement to the cost per participant is too simplistic. There are also legal obligations which might mean engagement is required and the question is not whether or not engagement should be done but what type is most effective.
Work your way through the following stages using the notes and checklists. Most are very easy to do and you probably already have easy access to some or much of the data that you need.
Annex: Approaches to economic evaluation
Economic evaluation helps make decisions about how best to use the limited resources available to you. You first identify, and then measure and compare the costs and impacts of different interventions. Economic evaluation does not have to monetise costs and benefits (that is measure them in pounds and pence), for example they can be defined as increments and decrements of human welfare. However, monetary values are popularly used as they provide a common measurement unit that can be easily compared.
A key challenge for engagement practitioners is that many of the benefits of engagement are intangible and hard to monetise. There are several methodologies designed to measure value:
Cost benefit analysis (CBA)
CBA is seen as one of the most robust economic evaluation methods. It is appealing because in theory it produces a clearer idea of the trade-offs between different options by making it enabling the direct comparison of the costs and benefits of a project. CBA requires a single unit of value for all impacts of the project so that a comparison can be made – most often money. This comparability is what makes CBA so appealing. CBA gives a more complete picture than other approaches. However, intangibles such as ‘strengthened relationships’ tend to be left out of the analysis as they are extremely hard to assign economic value to; more frequently major infrastructure programmes are moving away from relying on CBA alone. 1
Cost-effectiveness analysis (CEA)
Even when it is not possible to ascribe monetary value to the benefits of a project, it is often the case that one main benefit with a natural measurement unit can be determined, for example crime rates. CEA involves calculating the costs of producing units of benefit and various programmes can then be compared to one another with priority given to the option with the lowest cost per unit of outcome produced. The objective is decided upon, and then the CEA analyses the various options by which to attain that objective. 2 For example it might be possible to do a cost effectiveness study of different engagement activities and what impact they have on levels of trust; thus identifying the approach which provides the most cost efficient approach to increasing trust.
Social return on investment (SROI)
The SROI model is a measure designed to attribute and capture the value of the social benefits of investment. Most commonly the SROI model is used to assess public funds, translating environmental, economic and social outcomes into monetary values. Developed from cost-benefit analysis, SROI is a participatory, multi-stakeholder approach to measurement. It balances the sum of the benefits of a project with the investment that was required to achieve those benefits. The result is a ratio of the net present value of benefits to the net present value of the investment. 3
SROI = [ Net present value of benefits ] / [ Net present value of investment ]
- 1Involve (2005). The True Costs of Public Participation. (Involve), p.43.
- 2Involve (2005). The True Costs of Public Participation. (Involve), p.41.
- 3Neitzert, E. and Ryan-Collins, J. (2009). A better return: setting the foundations for intelligent commissioning to achieve value for money. (NEF and National Programme for Third Sector Commissioning), p.9